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At the Bartolone Legal Group, we handle a broad variety of bankruptcy, insolvency and other restructuring matters, including complex litigation cases.

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Bankruptcy, Chapter 7, Chapter 11, Chapter 13.

At the Bartolone Legal Group, we handle a broad variety of bankruptcy, insolvency and other restructuring matters, including complex litigation cases. We advise and represent debtors and creditors in restructuring matters and provide clients with practical business solutions to any insolvency situation.

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In the current economic climate, it is not uncommon for consumers and businesses to fall behind on their bills, expenses, and financial obligations. All it takes is one unpredicted job loss, one unexpected illness, or one sudden family emergency for a consumer in an otherwise excellent financial position to suddenly find themselves over their head with too much debt.

For consumers with this type of mounting, inescapable amount of debt, bankruptcy provides the relief they need to get a handle on their finances and become financially stable once again.

Types of Bankruptcy
Bankruptcy is the legal process of alleviating individuals and businesses of their debt, either through liquidation or reorganization. For individuals and families, and corporations there are three main types of bankruptcy:

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is by far the most common form of bankruptcy, as it provides people struggling with inescapable amounts of debt the financial relief they desparatley need. Also knowns as "Fresh Start" or "Straight" bankruptcy, Chapter 7 allows a person to eliminate most or all of his or her debt while being allowed to keep certain property he or she may have (exempt property).

In many cases, a person may keep their home or car (secured debt), provided that they continue to make current payments and are up to date on the loan.

Chapter 7 may eliminate:

  • Credit Card debts
  • Medical debts
  • Personal loan debts
  • Lawsuit debts
  • Judgments - unless fraud or criminal related
  • Deficiency debts on repossessed cars
  • Some personal injury debts

Chapter 7 cannot discharge:

  • Student Loans
  • Child Support
  • Spousal Support/Alimony
  • Most Taxes with Limited Exceptions
  • Fines for penalties or criminal offenses
  • Damages relating to operation of a vehicle while under the influence of drugs or alcohol

Filing for Chapter 7 bankruptcy has other advantages besides just eliminating your legal liability to repay your unsecured debt. As soon as you have filed the bankruptcy petition, creditors and collection agencies will be prohibited from contacting you and harassing you for your debt. They also cannot take any legal action against you or try to collect any money from you without permission of the bankruptcy court. For this reason, Chapter 7 bankruptcy is extremely advantageous, as creditor harassment is one of the worst effects of having unpaid debt. Furthermore, Chapter 7 bankruptcy can also halt wagee garnishment, foreclosures, property repossession, and freezes on your bank account, as well as liens on your property or personal self.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy permits the reorganization of businesses, whether organized as a corporation or sole proprietorship, and to individuals who have very large sums of debt, both secured and unsecured. However, Chapter 11 is predominantly utilized by business entities.

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Chapter 11 bankruptcy retains many of the features present in all, or most bankruptcy proceedings in the United States. It also provides additional tools for debtors as well. Most importantly, 11 U.S.C. Section 1108 empowers the trustee to operate the debtor's business. In Chapter 11, unless appointed for cause, the debtors acts ass trustee of the business.

Bankruptcy affords the debtor in possession a number of mechanisms to restructure its business. A debtor in possession can acquire financing and loans on favorable terms by giving new lenders first priority on the business' earnings. The court may also permit the debtor in possession to reject and cancel contracts. Debtors are also protected from other litigation against the business through the imposition of an automatic stay. While the automatic stay is in place, most litigation against the debtor is stayed, or put on hold, unti it can be resolved in bankruptcy court, or resumed in its original venue.

If the business' debts exceed its assets, the bankruptcy restructuring results in the company's owners being left with nothing; instead, the owners' rights and interests are ended and the company's creditors are left with ownership of the newly reorganized company. However, there are legal mechanisms and maneuvers that will assist the equity shareholders to retain their interest in the company.


Automatic Stay

As with other forms of bankruptcy, petitiosn filed under Chapter 11 invoke the automatic stay provisions of Section 362 of the Bankruptcy Code. The automatic stay requires all creditors to cease collection attempts, and makes post-petition debt collection void. Under some circumstances, creditors or the United States Trustee can ask the court to convert the case to liquidation under Chapter 7, or to appoint a trustee to amange the debtor's business. The court will grant a motion to convert to Chapter 7 or appoint a trustee if either of these actions is in the best interest of all creditors. Sometimes a company will liquidate under Chapter 11, in which the pre-existing management may be able to help get a higher price for divisions or other assets than a Chapter 7 liquidation would be likely to acheive. Appointment of a trustee requires some wrongdoing or gross mismanagement on the part of existing management and is relatively rare.


Automatic Stay

Chapter 11 is reorganization, as opposed to liquidation. Debtors may "emerge" from a Chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy. The Bankruptcy Code accomplishes this objective through the use of a bankruptcy plan. With some exceptions, the plan may be proposed by any party in interest. Interested creditors then vote on the plan. Upon the plan's confirmation, the plan becomes binding and identifies the treatment of debts and operations of the business for the duration of th plan.

Debtors in Chapter 11 have the exclusive right to propose a plan of reorganization for a period of time (in most cases 120 days). AFter that time has elapsed, creditors may also propose plans. Plans must satisfy a number of criteria in order to be "confirmed" by the bankruptcy court. Among other things, creditors must vote to approve the plan of reorganization. If a plan cannot be confirmed, the court may either convert the case to liquidiation under Chapter 7, or, if in the best interests of the creditors and the estate, the case may be dismissed resulting in a return to the status quo before bankruptcy. If the case is dismissed, creditors will look to non-bankruptcy law in order to satisfy their claims.


Executory Contracts

Some contracts, known as executory contracts, may be rejected if canceling them would be financially favorable to the company and its creditors. Such contracts may include labor union contracts, suppy or operating contracts (with both vendors and customers), and real estate leases. The standard feature of executory contracts is that each party to the contract has duties remaining under the contract. In the event of a rejection, the remaining parties to the contract become unsecured creditors of the debtor.


Priority

Chapter 11 follows the same priority scheme as other bankruptcy chapters. The priority structure is defined primarily by Section 507 of the Bankruptcy Code.

Chapter 13 Bankruptcy

Chapter 13 is a federal debt consolidation plan which allows you to rearrange your financial affairs and repay just a portion of your debts. Also referred to as "reorganization," Chapter 13 allows people to keep their assets by consolidating all of their debt and restructuring it into an affordable monthly payment plan.

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People who do not qualify for Chapter 7 bankruptcy, or have non-dischargeable debt, often turn to Chapter 13 bankruptcy to alleviate their debt. If you file for Chapter 13 bankruptcy, all of your debt will be consolidated to be paid over time. A reorganization plan has to be filed and approved by the court. Chapter 13 bankruptcy is a great option for people who are in foreclosure, behind on their car payments or have non-dischargeable debts.

lenders first priority on the business' earnings. The court may also permit the debtor in possession to reject and cancel contracts. Debtors are also protected from other litigation against the business through the imposition of an automatic stay. While the automatic stay is in place, most litigation against the debtor is stayed, or put on hold, unti it can be resolved in bankruptcy court, or resumed in its original venue.

Chapter 13 bankruptcy does not completely eliminate your debt. You will still be requird to pay off a portion or all of your debts, which is the purpose of the structured payment plan. The amount you pay towards your debt every month will be based on your monthly income, current monthly expenses, and any non-exempt assets. After you have finished making all of your payments, your remaining unpaid debt will be discharged. And the best part of all is that you get to keep your assets during the repayment process!

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